Maxwell School News

The Maxwell School associate professor of political science has been sought for the expertise he shared in his recent book, ‘Bucking the Buck.’

"After 9/11, the U.S. Treasury recognised that global dollar dominance gave Washington control over the critical plumbing of global finance. A new breed of financial sanctions emerged which could precisely cut individual targets—terrorists, foreign government officials, state institutions, firms—off from the dollar system. ‘Smart’ financial sanctions revolutionised economic warfare," writes Daniel McDowell, associate professor of political science.

The Maxwell School professor participated in a conference on climate and sustainability.

“Because the consequences are so dire, this high-stakes game of debt-limit chicken always ends the same way: Congress raises the borrowing cap just before calamity strikes. The theater does little more than waste money and generate a lot of breathless commentary,” Leonard Burman, professor emeritus of public administration and international affairs, wrote in a 2021 analysis.

To ensure long-term efficacy, sanctions are often better left as a threat and not actually carried out, says Daniel McDowell, associate professor of political science. 

“To me, de-dollarization just means a government’s ability to reduce its dependence or reliance on the dollar,” says Daniel McDowell, associate professor of political science. “I think the key thing here is to try to distinguish or separate the concept of de-dollarization from the end of dollar dominance. I don’t think those two things have to go together.”

"Moving policies toward racial and ethnic equality: The case of the supplemental nutrition assistance program," co-authored by economists Alfonso Flores-Lagunes and Hugo Jales, was published in the American Journal of Agricultural Economics.

"Over the last 15 years or so, we've seen some policies aimed at promoting its [renminbi] international use, but we've also seen a lot of policies that make it less attractive," says Daniel McDowell, associate professor of political science.

“China had economic motives to de-dollarize that predate sanction concerns,” says Daniel McDowell, associate professor of political science. “When the U.S. economy had a financial crisis, China ended up getting hurt. China figured, we should probably promote our own currency now.”

In one study, University Professor Jennifer Karas Montez and other researchers found that, if every state simply implemented the same policy environment as Connecticut, “The U.S. would increase its life expectancy by roughly two years,” she says. “That is a massive increase.”

“When China and Brazil sign an agreement like this, it’s trying to put into place the infrastructure that would make it possible to use China’s currency, but that doesn’t mean that individual firms are going to choose that,” says Daniel McDowell, associate professor of political science.

Daniel McDowell, associate professor of political science, discussed the implications of sanctions for the dollar's status, the relationship between dollar dominance and U.S. sanction capabilities, and the response of U.S. major rivals to these measures.

"Returns to Scale in Property Assessment: Evidence from New York State’s Small Localities Coordination Program," co-authored by Maxwell professors Yilin Hou and John Yinger, was published in the National Tax Journal.

Daniel McDowell, associate professor and director of undergraduate studies in political science, has written a new book, “Bucking the Buck: US Financial Sanctions and the International Backlash Against the Dollar” (Oxford University Press, 2023). 

Ryan Monarch, assistant professor of economics, says it would be more difficult for China's manufacturing industry to transition to the high-end amid deteriorating U.S.-China relations and the decoupling of business between the two countries.

It’s unlikely anything will be done in the near term, in part because of the current lack of bipartisanship in Washington, says Gary Engelhardt, professor of economics.

While Russia’s use of the yuan doesn’t mean the end of dollar supremacy, it may usher in the beginning of a more fractured system that could ultimately blunt the U.S.’s ability to use financial sanctions as a weapon, says Daniel McDowell, associate professor of political science.

"Offshoring barriers, regulatory burden and national welfare," co-authored by Professor of Economics Devashish Mitra, was published in Indian Economic Review.

"Gold has become an attractive hedge against sanctions risk for central banks at risk of such penalties. While there are limitations to gold's usefulness compared to, say, U.S. Treasuries, its unique appeal is found in its physical form, unquestioned value, and the ability to store bars in national vaults, safe from foreign seizure," says Daniel McDowell, associate professor of political science.

“When interest rates were very low, companies basically had endless money—and investors were telling them to focus on growth, not profitability,” says Aaron Benanav, assistant professor of sociology. “But because interest rates are rising, there’s a shift from big investors to say, ‘No, now you really have to focus on profitability.’ And the big way to do that is through cuts.”